Real Estate Search Direct

Have recent reports on the housing market scared you away from buying a home? If so, you aren’t alone. Many people are looking at the current housing crisis as if it was Armageddon.

The Chinese have a word for crisis –  weiji. The two characters taken separately mean danger and opportunity respectively. Opportunity can be found in crisis.

Imagine for a minute another home buyer. He bought his home at the height of the frenzy when banks were lending to anybody with a pulse. He knew he didn’t get the best mortgage. The rate would adjust in 3 years, and then the payments would be hard to keep up.

He expected the value of his home to increase as prices had been doing for the past few years, so he planned to re-finance when the loan-to-value (LTV) of his home increased enough to qualify for a better mortgage.

When the credit crisis hit, the home buyer saw the value of his house plummet, but he still had the adjustable rate mortgage. Three years after he bought his house his payments started to increase. He could no longer afford to make his payments. Do you think this is an unusual situation?

This story is a very common one, and it is becoming more common every day. People wh didn’t understand the market cycles assumed that the trend would continue indefinitely. Does this mean that you shouldn’t buy a home?

Just as it can be a mistake to buy when the market is increasing, it can also be an opportunity to buy when the market is decreasing. Look for the opportunity in this crisis.

If you are considering buying a house, it is a much better time to buy now than it was when prices were at their highest.

What kind of opportunity can be found?

• Homes are often sold for less than what the seller owes on them. This is called a short sale.
• Banks are holding too many foreclosed properties and must sell.
• Sellers are unable to get the price they want for their property so they become desperate to sell.
• Housing auctions are becoming commonplace.

Now banks are foreclosing on homes because they made risky loans when prices were soaring. They have too many foreclosed properties on their books and aren’t able to sell the ones they have. They don’t want to take back any more properties than they have to.

When a bank has too many foreclosed properties, it is not permitted to lend more money and can’t make any money by lending. This hurts the banks terribly. You may have heard of many banks being bailed out recently.

Banks are taking losses one way or another. Sometimes they are willing to accept much less than what is owed rather than take a property in foreclosure.

Other times the bank takes the property back and puts it up for sale at a steep discount. This can create a golden opportunity to get a property well below market value.

The key in getting a good deal in this market is to understand the market very well and know what is a good deal and what isn’t. The help of a professional Realtor is valuable in learning what is happening in your area and what is a good deal.

At www.realestatesearchdirect.com we have pre-screened Realtors in most US cities who can help you make an informed decision when buying a home. Visit our Search for Properties page to begin your real estate search today.

Allen Davis
Founder, RealEstateSearchDirect.com